Samsung last week introduced its new flagship smartphone, the Galaxy S8, after being forced to withdraw the previous model from the market because battery defects caused them to occasionally overheat and combust or explode.

The Galaxy S8 is getting glowing reviews. And investors are now asking me whether the Samsung SSNLF smartphone will hurt sales of the Apple AAPL  iPhone and, potentially, halt the Apple stock rally. In this column, I’ll focus on the latter theme.

Let’s start with an Apple chart and then explore fundamental, quantitative, sentiment and ownership factors.

Apple chart

Please click here for the annotated Apple chart. Note the following from the chart.

• The chart shows that the relative strength index (RSI), a momentum indicator, is in overbought territory. A number over 70 is considered overbought.

• Even though RSI is overbought, it is still below the peak reached last time. In the present context, it means Apple’s upward momentum can continue.

• Apple’s stock has jumped over 50% from the last major low. Historically, it is common for stocks to rise more than 50%, take out “stops” of short sellers, hit targets of long investors, turn non-believers into believers and make a further move to about 60% from the last major low. As of this writing, Apple’s stock is almost at that 60% point.

• After about a 60% move, there is usually a retracement.

• Apple’s stock has rallied 24% in the first quarter of 2017. 

• The chart shows that Apple is approaching 138.2% Fibonacci extension from the last retracement. Strong stocks often pull back from this Fibonacci extension.

• Those who are uninitiated might call Fibonacci voodoo. Before doing so, note from the chart that the last retracement in Apple’s stock stopped at the 50% Fibonacci retracement level and then bounced over 50%…Read more at MarketWatch

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